Request for Insurance Advice: How Much Do You Pay? What's Included?

So, I wrote a huge introduction to this question that turned into it's own post: My $10k Insurance Payout Story (Ice Addicted Tenant)

I've been doing my tax return at the moment and I realised I've been very lazy with getting good cover. Only one of my five properties is fully insured, fortunately, it was the one that I had all the issues with last year! So of the five:

1. House (from previous post): is fully insured with both landlord's insurance and building insurance with "NAB's residential investment insurance" (Allianz). Contents are insured for $22,050, building for $126,000 (I guess that's low). It has $500 excess, flood cover, and rent default included. I pay a premium of $693 per year. I've looked into Terri Scheer and EBM, but they seem to be a lot more expensive. Am I getting a good deal?
   
   
2. Townhouse: building is insured through the body corp. No loss of rent covered. Should I get this? What should I expect to pay?
   
   
3. Townhouse: building is insured through body corp. In a flood zone, but policy covers loss of rent for 6 months if a disaster occurs. Should I get more insurance?
   
   
4. Unit: It's 50m from a popular beach and currently in a rental pool. Exorbitant body corp covers for building insurance. I don't think I can get loss of rent for something in this situation.
   
   
5. House (PPOR): Has not settled, but is unconditional (I'm moving out of home). I've got NAB's free insurance they offer before the property settles, but nothing after that. It'd be easy to stick with it.... but lazy. Surely I can negotiate a better deal? But if it's similar to $693 per year.... that seems hard to beat? Or is it?

What do you pay for your premium? What extras do you insist you have? What am I missing out on by not going with EBM or Terri? Thanks for your support!

 

I will reply below in red as you are at substantial risk.

1. House (from previous post): is fully insured with both landlord's insurance and building insurance with "NAB's residential investment insurance" (Allianz). Contents are insured for $22,050, building for $126,000 (I guess that's low). It has $500 excess, flood cover, and rent default included. I pay a premium of $693 per year. I've looked into Terri Scheer and EBM, but they seem to be a lot more expensive. Am I getting a good deal?
   
   Good deal? You have a cheap deal so whilst everything goes relatively smoothly and any losses fall within the scope of the cover you're pretty much okay. Unfortunately those savings can quickly evaporate in one claim.
   
   I would assume you are underinsured at $126,000 for the building, you need to insure for the full value of replacement at today's prices including any other costs such as demolition and removal of debris etc. I would suggest you review.
   
   Without looking closely at your current policy I couldn't say for certain however there are a number of risks you simply may not be insured for. These would include Accidental Damage (not covered by many policies), you may have actually got a bit lucky with your previous claim, the first person you were dealing with may have been enforcing the policy terms to the letter and the second one may have given you some leeway.
   
   Damage and cleanup caused by a clandestine drug lab is also something not covered under a lot of policies, we've had claims approaching $50,000 in this instance. Pet Damage is another one, whether you have authorised a pet or not, the risk remains. Other possible situations to be careful of include Hardship, Death of a Tenant, Periodic Tenancies etc. that are not covered under all policies
   
   At the end of the day, you just need to be comfortable absorbing the additional risk of this type of policy, and willing to cop the potentially substantial loss should the situation not be covered.
   
2. Townhouse: building is insured through the body corp. No loss of rent covered. Should I get this? What should I expect to pay?
   
   This is a huge risk. Apart from your own contents (carpets, curtains, internal paintwork etc.) and potential tenant-related loss of rent situations, you have no liability cover for inside your townhouse. Should a tenant suffer an injury or other loss and you are found at fault, you are at a potential risk of substantial losses through the courts. Most landlords would generally insure this for a minimum of $20 million and is included in landlord policies.
   
   
3. Townhouse: building is insured through body corp. In a flood zone, but policy covers loss of rent for 6 months if a disaster occurs. Should I get more insurance?
   
   The same risk as no. 2 above. You have no liability cover except for that which is covered for common areas under the Body Corporate policy. The loss of rent cover there will not cover you for tenant-related issues which unfortunately are commonplace.
   
   
4. Unit: It's 50m from a popular beach and currently in a rental pool. Exorbitant body corp covers for building insurance. I don't think I can get loss of rent for something in this situation.
   
   Yes you certainly can. There are a number of policies available on the market via specialist companies, our specific version is RentCoverShortTerm.
   
   
5. House (PPOR): Has not settled, but is unconditional (I'm moving out of home). I've got NAB's free insurance they offer before the property settles, but nothing after that. It'd be easy to stick with it.... but lazy. Surely I can negotiate a better deal? But if it's similar to $693 per year.... that seems hard to beat? Or is it?
   
   Look around and ensure you are getting the cover you want. I would think it's a slightly easier space than the landlord insurance market but there are still differences between policies.

 

Thank you very much for taking the time to reply! I see your are representative from EBM... how do I go about getting the best rate from EBM?

 

If you would like to private message me your phone number I can get someone to give you a call.

 

Thanks Brett,

I've looked into EBM and spent hours today on the phone. I liked EBMs accidental damage policy.

What I didn't like was that you only offer 6 weeks loss of rent cover due to rent default. Both Terri Scheer and NAB (Allianz) offer 15 weeks in this instance (with a court order, in the case of Terri). In my opinion, this is the most important aspect of getting insurance, I had to rely on the full 15 weeks last year.

I really want to go with EBM, but I can't given the small 6 week loss of rent cover. If you can do the full 15 for me, I will go ahead with EBM, but otherwise I will go with Terri.

 

This is where it is difficult to compare policies. You need to look carefully at what circumstances these are covered under.

You will see that TS covers up to 6 weeks loss of rent for "Absconding tenant" or "Defaulting tenant (by termination notice)". This is the same for RentCover.

The 15 weeks covered under TS requires a court order as you have stated. Under RentCover, should a tenant not leave under a termination notice and require a court to remove them, you are covered under "Denial of Access" for up to 52 weeks.

So the real comparison is TS 15 weeks (or 28 if they further refuse to leave) vs EBM 52 weeks.

Further, Death of a Tenant under TS is 15 weeks vs EBM 52 weeks. Hardship under TS is 4 weeks vs EBM 6 weeks.

I don't usually like to get into direct feature comparisons but you can see how confusing it is.

I hope that makes sense.

 

I appreciate your reply. It is confusing! But we're dealing with insurance here... that's to be expected!

While I appreciate that (if I needed to claim), I may have some luck getting up to 52 weeks, it's also very ambiguous. What is not ambiguous is the 6 weeks - that's clear.

I don't have the peace of mind that I will be covered for over 6 weeks under EBM. So why doesn't EBM just offer 15 weeks for tenant default?

 

Sorry for the confusion.

The 15 weeks you are referring to covered by TS is when the tenant is defaulting in rent (by court order) – Up to 15 weeks loss of rent.

Under RentCover for tenants defaulting by court order or termination notice and where they fail to give vacant possession, we cover up to 52 weeks of loss of rent.

If a tenant defaults in their rent where there is no court order or termination notice, we pay up to 6 weeks loss of rent.

With all due respect, to do what you are suggesting we would need to reduce the cover we offer from 52 weeks down to 15 weeks maximum. Under this section of our policy we have paid claims for as much as 39 weeks whilst a tenant is being removed.

 

The eviction process requires good management to ensure it retains insurance cover. Tolerance for delayed rent can be a owners worst problem. I find a good PM manages that process if it comes to it. Most of the client "losses" I have seen have been due to delayed action and self-managed IP can be more prone to this